Six years after President George W. Bush began the auto bailout, the Obama administration on Friday declared a profitable end to the sweeping federal interventions in Wall Street and Detroit, saying a final sale of stock from General Motors’ former finance arm had closed a turbulent chapter of the financial crisis.
The programs “that helped restart the flow of credit to meet the critical needs of small businesses and consumers are now closed,” declared Treasury Secretary Jacob J. Lew. “And while the goal was always to stabilize the economy, and not to make a profit, it is important to recognize the return we have earned for taxpayers.”
The government actions, initially seen as necessary in Washington and on Wall Street to prevent a collapse of the economy on the order of the Great Depression, agitated the political world, helping give rise to the Tea Party movement on the right and the Occupy Wall Street movement on the left. And even as the nation climbed out of recession and slowly recovered, many Americans were left with little trust in the nation’s government and financial institutions.
This news item, filed from Washington, appeared on The New York Times website on Friday---and the 'thought police' have provided a new headline. It now reads "U.S. Declares Bank and Auto Bailouts Over, and Profitable". I thank Phil Barlett for today's first story.
Banks added to their wins in Washington this month by getting a reprieve from the Volcker Rule that will let them hold onto billions of dollars in private-equity and hedge-fund investments for at least two more years.
The Federal Reserve granted the delay yesterday after banks said selling the stakes quickly might force them to accept discount prices. Goldman Sachs Group Inc. has $11.4 billion in private-equity funds, hedge funds and similar investments, while Morgan Stanley has $5 billion, securities filings show.
“This is a great holiday present by the Fed,” said Ernest Patrikis, a former Federal Reserve Bank of New York general counsel who is now a partner at White & Case LLP.
This Bloomberg article, filed from Washington, appeared on their website at 10:00 p.m. Denver time on Thursday evening---and it's the second offering in a row from Phil Barlett.
As the headlines have made clear for years, JP Morgan Chase has a long rap sheet of illegal conduct and, although overlooked, it includes enabling Bernie Madoff's $64.8 billion Ponzi scheme, the largest in history, which caused net losses of more than $17 billion and untold human wreckage.
Six years ago on December 11, 2008, federal agents arrested Madoff, the ringleader of the Ponzi scheme -- as a coda to an age of regulator and prosecutorial incompetence and neglect, Madoff was not caught; he was arrested after turning himself in. This happened in the middle of the largest financial crash since 1929, when the country's economy was collapsing and when a second Great Depression was a very real possibility. Although not responsible for the crash and collapse, Madoff in handcuffs was in some ways the face of Wall Street greed and criminality.
However, that is a false and misleading picture of crime on Wall Street.
After all, how could this one guy possibly pull off such a crime and at that scale and for so long? He couldn't have and didn't. Like most substantial illegal and criminal financial activities, Madoff had a very close relationship with a big Wall Street bank: JP Morgan Chase, the country's largest bank. Given the focus on the crash and economic calamity in 2008 and JP Morgan Chase's years-long efforts to prevent any information from being publicly disclosed, JP Morgan's role in enabling this massive crime wasn't publicly known for years.
This commentary appeared on the Huffington Post Internet site at 2:02 p.m. yesterday---and I thank Harry Grant for sliding it into my in-box shortly after I'd filed today's missive.
At the Justice Department, senior officials like to congratulate themselves on the headline-making, big bucks settlements they have imposed upon banks and lenders for their part in causing the 2008 mortgage meltdown that sparked the biggest American financial crisis since the Great Depression.
But wait a moment. Those settlement figures are not quite what they seem. Buried deep in the announcements of the astronomical sums that Wall Street banks are being forced to pay is a dirty secret: A big chunk of the hundreds of billions of dollars banks have paid in settlements to various federal agencies and regulators since 2010 is deductible from the taxes banks and lenders pay.
When is a fine not a fine? When it can be put against your tax bill.
Because settlements can be deducted from tax liabilities, for nearly every dollar a bank or lender has pledged to pay in cash or pony up in other ways—such as through buying back soured mortgage-backed securities, extending cheaper loans or forgiving failed loans held by struggling homeowners—up to 35 cents will find its way back into bank coffers, a reflection of the 35 percent federal corporate tax rate.
This very interesting article appeared on the newsweek.com Internet site way back on October 27---and I found it in a GATA release yesterday.
If forced to venture a guess, I’d say the Chinese were actively supporting the ruble and Russian debt on Wednesday and Thursday. Early Thursday from Reuters: “China is closely monitoring the slide in the Russian rouble, the foreign exchange regulator said on Thursday, as the currency of one of its major energy importers struggles to avoid a free-fall… Chinese Foreign Ministry spokesman Qin Gang, speaking at a later news conference, added that he believed Russia would overcome its problems. ‘Russia has rich resources, quite a good industrial base. We believe that Russia has the ability to overcome its temporary difficulties,’ Qin said.”
I’ll speculate that the Chinese were becoming increasingly nervous – nervous about Russia, nervous about EM [Emerging Markets] and nervous about China. Global markets on Tuesday again found themselves at the precipice. The ruble collapse was inciting a more general flight out of EM currencies, bonds and stocks. Marketplace liquidity was evaporating – leading to brutal contagion at the Periphery and increasingly destabilizing de-risking/de-leveraging at the Core. In short, Bubble Off was taking over – in yet another market “critical juncture.” The ruble (miraculously) reversed course, EM rallied, global markets for the most part reversed and the “Core” U.S. equities market took flight. From Wednesday lows to Friday’s highs, the Dow surged 800 points, or 4.7%. Bubble On. “Risk on” no longer does justice.
Most would likely challenge my view of the markets being on the “precipice” during Tuesday trading. Let me back up my claim. Tuesday trading saw a major Emerging Market CDS (Credit default swap) index jump to the highest level since the tumultuous summer of 2012.
My thesis has been that the “global government finance Bubble” has burst at the Periphery. EM sovereign, corporate and financial debt is the global “system’s” weak link. Dollar-denominated EM debt in particular is unfolding crisis’ “toxic” debt. Regrettably, Brazil is right in the thick of it---and last week I wrote that the EM dollar-denominated debt dam had given way. This dynamic was clearly in play early in the week.
I've been waiting for Doug's Friday Credit Bubble Bulletin all week long---and now that it's up at the prudentbear.com Internet site, it doesn't disappoint. It's the most important must read in today's column---and I found it there before reader U.D. could pass it around.
The U.S. government's transferring to itself this month liabilities for defaulted derivatives resulting from bank failures is alarming for the haste with which it was enacted, GoldMoney research director Alasdair Macleod writes on Friday.
"Instead of a normal consultative procedure allowing the legislators to draft the appropriate clause," Macleod writes, "the wording was lifted at short notice from a submission by Citibank, which has some $61 trillion worth of derivatives on its own books, with virtually no alterations. Either the insertion was correcting an oversight at the very last minute or, alternatively, it has suddenly become an urgent matter for the too-big-to-fail banks. The coincidence of current market volatility and this hurried legislation cannot be lightly dismissed and suggests it is the latter."
Macleod's commentary is headlined "Derivatives and Mass Financial Destruction" and it's posted at GoldMoney's Internet site---and it's definitely worth reading. I found it on the gata.org Internet site---and I thank Chris Powell for wordsmithing "all of the above".
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.
People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.
The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.
Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”
This commentary by Paul showed up on his web site on Wednesday. Several readers were kind enough to send it my way, but until now I've decided to pass on it. It's worth reading as well---and I thank David Caron for sending me this copy of it.
Normalization of relations with Cuba is not the result of a diplomatic breakthrough or a change of heart on the part of Washington. Normalization is a result of US corporations seeking profit opportunities in Cuba, such as developing broadband Internet markets in Cuba.
Before the American left and the Cuban government find happiness in the normalization, they should consider that with normalization comes American money and a US Embassy. The American money will take over the Cuban economy. The embassy will be a home for CIA operatives to subvert the Cuban government. The embassy will provide a base from which the US can establish NGOs whose gullible members can be called to street protest at the right time, as in Kiev, and the embassy will make it possible for Washington to groom a new set of political leaders.
In short, normalization of relations means regime change in Cuba. Soon Cuba will be another of Washington’s vassal states.
This short commentary by Paul pretty much sums up what Washington's plans are for Cuba---and it was posted on his Internet site yesterday. I thank Dan Lazicki for sharing it with us.
A City banker has been arrested by the Serious Fraud Office in connection with its investigation into the rigging of the £3.5 trillion-a-day foreign exchange markets.
The banker is the first person to be detained in connection with the global foreign exchange rate-rigging scandal and was held following a dawn raid on his Essex home.
“In connection with a Serious Fraud Office investigation, we can confirm one man was arrested in Billericay on 19 December,” an SFO spokesman said. “ Officers from the City of London Police assisted with the operation.”
The arrest follows a record-breaking £2bn fine imposed on five global banks for their role in the scandal. About 30 bankers have been sacked or suspended but until now no arrests have been made.
This article, which is definitely worth reading, appeared on The Guardian website at 4:26 p.m. GMT on Friday afternoon and its the first offering of the day from South African reader B.V.
The North Sea oil industry could lose 15,000 jobs in Scotland and production might fall by 10pc as drillers cut back in response to falling oil prices but predictions that the region is “close to collapse” are exaggerated, Sir Ian Wood has said.
Sir Ian was responding to comments made by Robin Allan, chairman of the independent oil explorers association Brindex, who said yesterday that it is now “almost impossible to make money” in the North Sea with prices at levels around $60 per barrel.
However, Sir Ian – who is one of the most respected figures in the UK oil industry and who recently led the Government review into maximizing North Sea output – also warned that drillers faced a “tough time” ahead.
"It’s important to have a balanced perspective at this time,” he said in statement. “The UKCS (UK Continental Shelf) does face a very difficult year to 18 months which will see a slow down in investment, the loss of some offshore production, up to 10pc, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate.”
This news item put in an appearance on the telegraph.co.uk Internet site at 1:40 p.m. GMT yesterday afternoon---and it's the second offering in a row from reader B.V.
A former employee of Geneva-based private bank Reyl has been handed a two year suspended prison sentence for violating confidentiality agreements. He had alleged in 2013 that around 15 French politicians had secret accounts with the bank.
Pierre-Gerbier Condamin admitted sharing financial information and violating trade secrets to the Federal Criminal Court in Bellinzona that pronounced the verdict on Friday.
He also admitted to fabricating the list of French tax evaders and falsifying documents to prove its existence.
In 2013, Condamin claimed that he held a list of well-known French names with undeclared Swiss bank accounts and had testified at a French parliamentary commission investigation into tax evasion charges against former French budget minister Jerôme Cahuzac.
This article was posted on the swissinfo.ch Internet site at 4:52 p.m. Europe time yesterday---and it's courtesy of Harry Grant.
A lawmaker from a small right-wing party claimed Friday he had been offered a bribe worth up to 3 million euros ($3.68 million) to vote in favor of electing Greece's new president, in the latest twist in the bailed-out country's fraught presidential vote.
Greece faces early general elections if its 300-member parliament fails to elect a president by the third round of voting on Dec. 29. In Wednesday's first round, the sole candidate and government nominee garnered 160 votes; 180 are needed for election.
Actor Pavlos Haikalis of the Independent Greeks claimed during a phone-in to a live television program that he was offered about 700,000 euros in cash, a loan repayment and advertising contracts, with the alleged bribe's total value amounting to about 2-3 million euros ($2.4-$3.7 million). He didn't identify the person, but said he had informed a prosecutor about two weeks ago and had turned over audio and video material.
Haikalis later alleged that the man who contacted him claimed to be acting on behalf of Prime Minister Antonis Samaras and a banker.
This AP story was picked up by the uk.news.yahoo.com Internet site late yesterday afternoon Europe time---and I borrowed the headline from the Zero Hedge spin on this story. I thank Harry Grant once again for bringing it to our attention.
Greek-Cypriot Attorney General Costas Clerides announced that five Bank of Cyprus officials are facing serious charges that could result to 20-year prison sentences.
The Bank of Cyprus is the bailed in lender of the country whose economy faced difficulties in 2012. The five Bank of Cyprus officials will be the first bankers to be charged in the collapse of the country’s primary lender, which had to seize 47.5 percent of deposits over 100,000 euros in order recapitalize.
he five men who will be charged are Andreas Eliades, former Bank of Cyprus CEO, Yiannis Kypris, current CEO, Theodoros Aristodemou, former board chairman, Andreas Artemi, former board vice chairman and Yiannis Pehlivanidis, the former deputy CEO who overlooked the bank’s operations in Greece. Furthermore, the Bank of Cyprus, as a legal entity, will also be charged.
Following a year-long criminal investigation, the five men are facing charges of stock market manipulation, providing false and misleading statements, failing to provide information to investors, as well as other charges that have yet to be been announced.
This news item was posted on the greekreporter.com Internet site on Thursday sometime---and it's the third contribution in a row from reader Harry Grant.
Although Washington (Kerry) is ostensibly moderating in some ways (but not including sending lethal materiel to Ukraine and NATO for a potential confrontation with Russia), Putin may now be counting to the EU to split away from the march to war. Europe cannot punish Russia through sanctions at the behest of Washington without ruining its own economy. Putin recognizes this as increasingly do Europeans. There is discussion in Russia and Europe about the crisis and (still) none in the United States. Cohen is very worried about the lack of discussion in the United States and this may be the basis for the disastrous foreign policy disasters of the past three presidents.
Putin, the statesman, does not want war in Europe, and Cohen may not want to think about whether Washington does want war. He does, however, once more put all the blame for this mess with Washington. Meanwhile Kiev is spending on military materiel and not on energy for heat and electricity for its freezing population - certainly with pressure from Washington. To nullify the Ukraine problem Putin has three options. 1) invade Ukraine and put a new government in Kiev; 2) cease all trade with Ukraine and send home 3 million Ukrainian workers residing in Russia (likely with the growing economic problems anyway); 3) take Ukraine to court and force capitulation through bankruptcy. I suspect Putin will pick #3 if time permits. We are reminded that Putin has not treated west Ukraine as an enemy state but instead has tried to negotiate a peaceful settlement throughout this crisis. This is rarely even hinted about in North American [N.A.] prostitute articles from leading news sources. Propaganda in N.A. trumps reality thoroughly.
Cohen also sees a danger for Ukraine to disintegrate and some of its territory going to Hungary and Poland - as this ethnic mix is present in numbers in the west of the country for this to become attractive to those governments. Putin would not consider a failed state on its borders an advantage to anyone - thus his ostensible policy of appeasement and appeal to reason and law. Appeals for U.N. involvement have so far yielded nothing for him to end the crisis. We should also blame Washington for this.
This 39:46 minute audio commentary, with no transcript, was posted on the johnbatchelorshow.com Internet site on Tuesday---and I thank Larry Galearis for sharing it with us.
The Ukraine Freedom Support Act, signed by US President Barack Obama on Thursday, authorizes providing anti-tank weapons, surveillance drones to Ukraine, and allows the White House to impose sanctions on Russian energy giant Gazprom and arms exporter Rosoboronexport.
The bill, “the Ukraine Freedom Support Act of 2014,” authorizes but does not mandate the president to impose expanded sanctions against Russia’s defense, energy and financial sectors. On Ukraine, the bill calls for support – from providing lethal weapons to reducing energy dependence. Several national security provisions in the bill, as well as the wording of certain sections give the president flexibility in the implementation of the text.
''The President is authorized to provide defense articles, defense services, and training to the Government of Ukraine for the purpose of countering offensive weapons and reestablishing the sovereignty and territorial integrity of Ukraine, including anti-tank and anti-armor weapons, crew weapons and ammunition, counter-artillery radars to identify and target artillery batteries, fire control, range finder, and optical and guidance and control equipment, tactical troop-operated surveillance drones, and secure command and communications equipment,'' the document reads.
This story, filed from Washington, appeared on the sputniknews.com Internet site at 7:50 a.m. Moscow time on their Friday morning, which was ten minutes before midnight in New York on Thursday evening. I thank reader M.A. for sending it.
Ukraine’s credit rating was cut by Standard& Poor’s, which said a default could become inevitable as central bank reserves are melting and a bailout is being held up as fighting in the country’s easternmost regions continues.
S&P lowered the long-term sovereign rating one level to CCC-, nine steps below investment grade, assigning a negative outlook, according to a report published today. The country’s 2017 dollar bonds gained, the hryvnia was little changed.
“A default could become inevitable in the next few months if circumstances do not change, for instance if additional international financial support is not forthcoming,” S&P analysts led by Ana Jelenkovic said in a statement from London.
Ukraine’s government needs $15 billion on top of a $17 billion international bailout, according to the European Union, to stay afloat as the bloodiest conflict since World War II ravages industry in the country’s Donetsk and Luhansk regions. The government estimates gross domestic product will contract 7 percent this year, while foreign reserves are at the lowest in more than a decade.
This Bloomberg story, filed from Kiev, appeared on their website at 1:19 p.m. MST yesterday afternoon---and I thank Manitoba reader U.M. for her first contribution to today's column.
Belarusian President Alexander Lukashenko has ordered his cabinet ministers to stop trading using the Russian rouble. Instead, the country - who is one of Russia’s closest allies - will trade only in dollars or euros, after Russian President Vladimir Putin admitted on Thursday his country may be on the verge of a two year recession.
“Lately I keep hearing that the Russian rouble is falling and that is 40% of our export market and we stand to carry losses. So what can we do, when this is what our partner and that is what the situation is in Russia and in Ukraine, they are also our partners,” Lukashenko told his cabinet of ministers in the Belarusian capital of Minsk on Thursday night.
“The set objective is to trade with Russia not in roubles but in dollars,” Lukashenko said. “That is how we will pay pay the Russian federation for energy, not in roubles but in dollars.”
“We must work and trade with Russia in a way that they too pay us in dollars or in euro,” Lukashenko added.
This interesting article appeared on the newsweek.com Internet site at 7:44 a.m. EST on Friday morning---and I thank Casey Research's own Louis James for passing it around yesterday.
Economic hardship is being created by the foreign-controlled Bank of Russia's monetary policies, to spread mass discontent and facilitate a Maidan in 2015 to remove Putin. So claims Evgeny Fedorov, citing the colonialist Central Bank law, established after Washington's victory in the Cold War, and the system of fifth-column levers, methodically operated to steer the revolution.
Evgeny Fedorov is a Deputy of the State Duma and the coordinator of the National Liberation Movement for restoring sovereignty of Russia.
I've listened to part of this already---and will watch the rest of it over the weekend. This youtube.com video clip was posted on 23 November---and I thank reader "Wojtek from Warsaw" for bringing this to my attention---and now to yours. I consider it a must watch.
China offered enhanced economic ties with Russia at a regional summit this week as its northern neighbor struggled to contain a currency crisis.
“To help counteract an economic slowdown, China is ready to provide financial aid to develop cooperation,” Premier Li Keqiang said at a Dec. 15 gathering in Astana, Kazakhstan. While the remark applied to any of the five other nations represented at the meeting of the Shanghai Cooperation Organization group, it was directed at Russia, according to a person familiar with the matter who asked not to be named as the plans weren’t public.
Any rescue package for Russia would give China the opportunity of exercising the kind of great-power leadership the U.S. has demonstrated for a century -- sustaining other economies with its superior financial resources. President Xi Jinping last month called for China to adopt “big-country diplomacy” as he laid out goals for elevating his nation’s status.
“If the Kremlin decides to seek assistance from Beijing, it’s very unlikely for the Xi leadership to turn it down,” said Cheng Yijun, senior researcher with the Institute of Russian, Eastern European, Central Asian Studies at the Chinese Academy of Social Sciences in Beijing. “This would be a perfect opportunity to demonstrate China is a friend indeed, and also its big power status.”
This Bloomberg article, co-filed from Hong Kong and Beijing, was posted on their website at 7:33 p.m. Denver time early Friday morning---and my thanks go out to reader U.M. for sending it along.
Something strange is going on in China. On one hand, as the chart below shows, China's trade surplus is growing and growing, and just hit record highs. In other words, China is - on paper - receiving record amounts of foreign currencies in exchange for its (mostly) goods exports.
Yet on the other hand, a chart from Deutsche Bank shows something very peculiar: even as China's foreign reserves should be rising, they are not only dropping, but just suffered their biggest quarterly drop in the past decade!
This validates what the TIC data has shown recently, namely that China has not only not been adding to US Treasury but reduced its TSY holdings to the lowest since February 2013, and that contrary to what some have alleged, China is not using Belgium as an offshore-based conduit for Treasury accumulation.
A bigger question is just what is China buying "off the books" to account for this reserve decline, amounting to about $100 billion in Q3, or is this merely due to even more off the books "capital flight" as some has speculated. Or is China indeed actively buying commodities - either as shown here previously for Commodity Funding Deals involving gold or in physical bulk, perhaps to quietly fill up its new Strategic Petroleum Reserve - and bypassing the official ledger in doing so. If so, which commodities is China buying, and how big will the foreign reserve plunge be in the fourth quarter.
This very interesting Zero Hedge posting, with some excellent charts, is certainly worth a few minutes of your time---and it's the second contribution in a row from reader U.M.
November 18, 2014: it’s a day that should live forever in history. On that day, in the city of Yiwu in China’s Zhejiang province, 300 kilometers south of Shanghai, the first train carrying 82 containers of export goods weighing more than 1,000 tons left a massive warehouse complex heading for Madrid. It arrived on December 9th.
Welcome to the new trans-Eurasia choo-choo train. At over 13,000 kilometers, it will regularly traverse the longest freight train route in the world, 40% farther than the legendary Trans-Siberian Railway. Its cargo will cross China from East to West, then Kazakhstan, Russia, Belarus, Poland, Germany, France, and finally Spain.
You may not have the faintest idea where Yiwu is, but businessmen plying their trades across Eurasia, especially from the Arab world, are already hooked on the city “where amazing happens!” We're talking about the largest wholesale center for small-sized consumer goods -- from clothes to toys -- possibly anywhere on Earth.
The Yiwu-Madrid route across Eurasia represents the beginning of a set of game-changing developments.
This commentary is a must read, especially if you're a serious student of the New Great Game. It was posted on the tomdispatch.com Internet site on Thursday---and the first person through the door with it was Brad Robertson.
Being killed by remote control is a uniquely scary prospect to most of us. But we are now close to the point where drone technology has become ubiquitous, as it can be used for a variety of purposes by anyone with a bit of money to spend.
The drones on offer today can go miles into the sky, and there have been numerous cases already where the situation could have spiraled out of control, like when a plane nearly missed a drone.
Bruno Kramm, chairman of the Pirate Party in Germany, explains that the pocket drones also “pose a huge risk to privacy… the more this technology gets developed, the more there is the possibility it can really go deeper into our privacy… it’s really like a danger of spy technology that everybody can use in their daily life.”
By posting videos online, groups of drone enthusiasts are showing just how easy it is to build a lean, mean killing machine that shoots things at you and flies away. Many have used their toys to illustrate just “how dangerous they would be in the hands of a civilian.”
I've had this very interesting but disturbing story in my in-box for a couple of weeks---and really haven't had spot to stick it in, so I'm posting it here. You can bet that this idea is in the advanced development stages by militaries all over the world by now. It showed up on the Russia Today website back on December 7---and I thank Roy Stephens for digging it up for us.
Citigroup Inc. bought the bulk of Credit Suisse Group AG’s commodities business, continuing an expansion into a market as its biggest rivals retreat, according to two people briefed on the transaction.
The purchase includes positions in base and precious metals, iron ore, coal, crude oil and oil products, U.S. and European natural gas, and freight, said the people, who asked for anonymity because the deal hasn’t been made public. Employees won’t change firms as a result, said the people, who didn’t provide details about the terms of the transaction.
Five years after selling its Phibro LLC energy-trading unit, New York-based Citigroup has reasserted itself in commodities amid a pullback by banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. Regulatory scrutiny has mounted, with the Federal Reserve warning last month that it may impose new restrictions as lawmakers question whether banks’ role in the markets could threaten financial stability.
Citigroup has embarked on a multi-year effort to gain revenue and market share in commodities, Jose Cogolludo, global head of sales, said in an interview last December. Earlier this year, the bank bought Deutsche Bank AG’s trading positions for metals, oil and power, one of the people said.
This Bloomberg news item appeared on their website at 10:38 a.m. Mountain Standard Time [MST] yesterday---and my thanks go out to reader U.D. for sharing it with us.
Last year, we gave the experts $10,000 to play with but this year, we bumped it to $100,000. Of course, we also asked them which investments they absolutely would avoid in 2015 and their New Year’s resolution.
Rickards on Investing
“Number one, it’s really, really important to be diversified,” Jim Rickards starts off. However, the best-selling author explains that being diversified doesn’t mean owning fifty stocks, “that’s not diversification, that’s one asset class.”
Rickards says to invest in completely different classes. “[T]he biggest challenge facing investors today is that we have inflation and deflation fighting each other at the same time and you don’t know which way it’s going to tip, and you need to be prepared for both.”
These very interesting comments by Jim were posted on the kitco.com Internet site at 11:20 a.m. EST on Friday morning---and I thank Harold Jacobsen for bringing it to our attention.
Mark O'Byrne, executive director at Goldcore Ltd., says Russia is more likely to dip into its dollar reserves than sell gold to stem the ruble's decline. He speaks to Anna Edwards, Mark Barton and Manus Cranny on Bloomberg Television's "Countdown."
This 5:51 minute Bloomberg Europe video clip put in an appearance on their website at yesterday sometime---and I thank Ken Hurt for digging it up for us. It's worth watching.
Bullion Star market analyst and GATA consultant Koos Jansen calls attention to comments this week by Russian President Vladimir Putin indicating that Russia is not selling its gold reserves.
And he also gives an interview summarizing gold repatriation efforts by central banks.
The links to both of these gold-related stories are embedded in this GATA release from yesterday. I must admit that I haven't had the time to look at either one, but I certainly plan on doing so in what's left of my weekend.
Yesterday, when we reported the latest rumor of Russian gold selling, this time out of SocGen, we said that "it should be noted that SocGen and its "sources" have a conflict: in an indirect way, none other than SocGen is suddenly very interested in Russia stabilizing its economy because as we wrote before, "Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet" which also sent SocGen's default risk higher in recent days. So if all it will take to stabilize the RUB sell off, reduce fears of Russian contagion, and halt the sell-off of SocGen stocks is a "source" reporting what may or may not be the case, so be it."
Moments ago, as if to deter further speculation that Russia is indeed converting hard money earned from real resources for fiat paper, the Russian monetary authority made it quite clear, that at least in November, Russia not only did not sell any gold, but in fact bought another 600K ounces in the month of November.
This Zero Hedge article was posted on their website at 9:40 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for her final contribution to today's column.
India's import volumes of gold and silver in November were "spectacular," Bullion Star market analyst and GATA consultant Koos Jansen reported yesterday. It seems that between them India and China are acquiring nearly all the annual production of the world's gold mines.
But surely the Bundesbank won't mind if the U.S. government and allied bullion banks dip into the German gold reserves vaulted into the United States for use as necessary in gold price control operations.
This commentary, along with some excellent charts, certainly falls into the must read category---and it's another story that I found on the gata.org Internet site yesterday.
U.S. regulators have labeled insurer MetLife as a potential threat to the financial system, a designation that brings stricter government oversight.
MetLife said Thursday that the Financial Stability Oversight Council has designated the company as "systemically important." As a result, MetLife must increase its cushion of capital against losses, limit its use of borrowed money and submit to inspections by examiners. MetLife will come under the supervision of the Federal Reserve. Its primary regulator now is New York state.
Regulators saw a need for closer oversight of big financial companies that aren't banks after the near-collapse of insurer American International Group threatened to bring down the global system in September 2008 during the crisis. The idea is to prevent a catastrophic collapse that could lead to another financial meltdown.
New York-based MetLife is the largest U.S. life insurer, with about $475 billion in assets under management.
This AP story, filed from Washington, appeared on the news.yahoo.com Internet site on Thursday afternoon EST---and today's first news item is courtesy of West Virginia reader Elliot Simon.
The U.S. Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.
They have collectively borrowed $5.7 trillion in U.S. dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.
Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are "short dollars", in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.
The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a "considerable time" has gone, and so has the market's security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.
This commentary from Ambrose Evans-Pritchard showed up on the telegraph.co.uk Internet site at 9:27 p.m. GMT on Wednesday evening---and falls into the must read category. I thank Roy Stephens for his first offering in today's column.
U.S. President Barack Obama has not yet signed a bill clearing the way for more economic sanctions against Russia. The U.S. State Department confirmed Jen Psaki misspoke during the press briefing.
The bill was expected to be signed “by the end of the week,” according to White House press secretary Josh Earnest’s statement in Tuesday. U.S. State Department spokesperson Jen Psaki claimed on Wednesday that the bill was already signed.
“He signed it yesterday,” Psaki stated during the briefing, interrupting Russia Today’s Gayane Chichakyan who was asking a question about the bill dubbed Ukraine Freedom Support Act of 2014.
However, according to representatives of the White House “the President has not yet signed this legislation.”
This article put in an appearance on the Russia Today website at 9:44 p.m. Moscow time on their Wednesday evening, which was 1:44 p.m. in New York.
Wealthy Russians, desperate to get their money out of Moscow in the wake of the Russian economic crisis, are panic-buying in London this week, according to high-end estate agents.
Russia has lost control of its economy in the last few days after an interest rate hike by the central bank failed to stem the collapse of the rouble, accelerating the trend of Russian buyers in the UK capital.
Beauchamp Estates said it has seen as much as a 10pc uptick in sales of luxury London homes to Russians since the rouble started to spiral a year ago.
"I currently have half a dozen Russian clients urgently looking to spend over £20m each on buying a new home in central London. For them the address must be Belgravia, Knightsbridge, Mayfair and Regents Park, it's got to be a prestigious postcode and ideally a park side or leafy address," said Gary Hersham, founder of Beauchamp Estates.
This real estate-related article was posted on The Telegraph website at 4:55 p.m. GMT on Wednesday afternoon---and I found it in yesterday's edition of the King Report.
Wealthy Russian home buyers are vanishing from London after driving a wave of foreign investment that lifted property prices to records. Only the oligarchs persist.
The number of Russians registered through Christie’s International Real Estate to buy homes in the city dropped by 70 percent in a year, said Giles Hannah, the broker’s senior vice president. That has led to a plunge in offers for properties priced at less than 10 million pounds ($16 million) as it becomes more difficult for all but the wealthiest to take money out of their home country.
“The banks are limiting what they can withdraw and we’re expecting further impact as sanctions kick in,” said Hannah, who advised Russian families on 180 million pounds of London property deals in the past two years. “The oligarchs are still spending. They already have banks or lawyers over here that allow them to make purchases.”
This Bloomberg article, filed from London, appeared on their Internet site at 4:04 a.m. Denver time on Thursday morning---and it's the second offering of the day from Elliot Simon.
Britain’s oil industry is in a “crisis” and may be “close to collapse,” a senior oil industry expert has said, as the UK’s biggest oil and gas companies continue to cut staff and investment and the price of crude slumps.
Speaking to the BBC, Robin Allan, chairman of the independent explorers’ association Brindex, echoed warnings made by other figures in the oil industry in the past month, saying that no new projects in the North Sea would be profitable while oil is being traded at below $60 a barrel.
“It's almost impossible to make money at these oil prices,” Allan said.
“It's close to collapse,” he said. “In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”
This Russia Today piece, borrowed from a BBC article, showed up on their website at 12:31 p.m. Moscow time on their Thursday afternoon---and it's the second story today from Roy Stephens. The folks over at Zero Hedge have spun this story with a headline that reads "It's A Huge Crisis" - The U.K. Oil Industry is "Close to Collapse, People Are Being Laid Off"---and it's courtesy of Manitoba reader U.M.
The European Union banned investment in Crimea on Thursday, halting European help for Russian Black Sea oil and gas exploration and outlawing European cruise ships from calling at Crimean ports.
The new measures, which E.U. governments have signed off on and will take effect on Saturday, reinforce the E.U.'s policy of not recognizing Moscow's annexation of Ukraine's Crimea region in March.
E.U. leaders, who meet in Brussels later on Thursday, will pledge to keep up pressure on Russia over its role in Ukraine despite Russia's currency crisis and ailing economy, diplomats said.
The E.U. is outlawing investment in Crimea, preventing Europeans and E.U.-based companies from buying real estate or companies in Crimea or financing Crimean companies, the bloc said in a statement.
This Reuters article, filed from Brussels, appeared on their Internet site at 12:22 p.m. EST on Thursday---and it's the second contribution of the day from reader U.M.
E.U. leaders have not made a decision on new sanctions against Russia, and easing of those currently imposed will depend on the situation in Ukraine, French President Francois Hollande stated.
"There were no new sanctions, because they should not be. Easing of sanctions will depend on our affirmation of progress," Hollande told journalists after the E.U. summit in Brussels.
On Thursday, a European diplomat told RIA Novosti that at the summit in Brussels, E.U. heads could discuss reducing sanctions imposed on Russia.
This news item, filed from Brussels, appeared on the sputniknews.com Internet site at 2:18 a.m. Moscow time on their Friday morning---and I thank reader M.A. for sending it to me just before I hit the send button on today's column.
Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 a.m. Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.
The factors from the "past few days" in question that the SNB was envisioning to justify becoming the latest entrant to the NIRP monetary twilight zone: Russian capital flight. Per Bloomberg, "the SNB move follows Russia’s surprise interest-rate increase this week and hints at the investment pressures that resulted after that decision failed to stem a run on the ruble. Swiss officials acted as the turmoil, along with the imminent threat of quantitative easing from the ECB, kept the franc too close to its 1.20 per euro ceiling for comfort."
“This is not the magic bullet, but will buy them time,” said Peter Rosenstreich, head of market strategy at Swissquote in Gland, Switzerland. “This will relieve pressure from the floor in the short term, but not in the long term.”
This interesting story showed up on the Zero Hedge website at 9:43 a.m. EST yesterday---and it's courtesy of reader M.A.
Greeks are heading to the polls again. Prime Minister Antonis Samaras has called a snap election to appoint the country's new head of state. Despite only being a symbolic role, the vote for a new president has sent nerves jangling across the eurozone once again.
With the first of a round of three votes completed, the fate of the current moderate centre-right coalition government hangs in the balance. Waiting in the wings is the radical hard-Left Syriza, who have promised to defy the country's bailout terms and whose election could trigger financial panic at the prospect of a 'Grexit' once again.
Syriza leader Alexis Tsipras says he does not want Greece to leave the euro, but after €245bn (£193bn) in loans and bailouts from the Troika, and one near-debt default later, here are the numbers that show why Greece can't remain in the single currency any longer.
This longish, but very interesting news item was posted on The Telegraph's website at 11:30 a.m. GMT yesterday morning---and it's courtesy of Harry Grant.
Russian President Vladimir Putin held the tenth annual press conference earlier today. During the session, Putin discussed important issues that Russia is currently facing: the situation in Ukraine, the fall of the ruble and economic problems, as well as intensifying relations with the West.
This longish, but very worthwhile read put in an appearance on the sputniknews.com Internet site at 3:20 p.m. Moscow time on their Thursday afternoon, which was 7:20 a.m. EST. Reader M.A. was the first person through the door with this story early yesterday morning.
Other stories on this were from Zero Hedge---Putin Defiant, Lashes Out At West, Tells Russians Economy May Stay Weak For Two Years---courtesy of Dan Lazicki. Also this piece from The Telegraph---Russia will emerge from crisis within two years, says Putin---thanks to Roy Stephens. And this article from the Russia Today website headlined "Western nations want to chain 'the Russian bear' - Putin"---also thanks to Roy Stephens.
Even facing what under any circumstances is a perfect storm; President Putin delivered an extremely measured performance at his annual press conference and Q&A marathon.
The perfect storm evolves in two fronts; an overt economic war – as in siege by sanctions - and a concerted, covert, shadow attack to the heart of the Russian economy. Washington’s endgame is clear: impoverish and defang the adversary and force him to meekly bow to the ‘Empire of Chaos’s’ whims. And bragging about it all the way to “victory.”
The problem is Moscow happens to have impeccably deciphered the game – even before Putin, at the Valdai Club in October, pinned down the Obama doctrine as “our Western partners” working as practitioners of the “theory of controlled chaos.”
This commentary by Pepe easily falls into the absolute must read category---and it was posted on the Russia Today website at 3:25 p.m. Moscow time on their Thursday afternoon---and the first reader through the door with this was Roy Stephens, for which I thank him.
The world is still hell-bent for hydrocarbon-based energy. Russia is the world’s largest producer of energy. Russia has recently announced that in the future she will no longer trade energy in US dollars, but in rubles and currencies of the trading partners. In fact, this rule will apply to all trading. Russia and China are detaching their economies from that of the West. To confirm this decision, in July 2014 Russia’s Gazprom concluded a 400 billion gas deal with China, and in November this year they signed an additional slightly smaller contract – all to be nominated in rubles and yuan.
The remaining BRICS – Brazil, India and South Africa – plus the members of the Shanghai Cooperation Organization (SCO) – China, Russia, Kazakhstan, Tajikistan, Kirgizstan, Uzbekistan and considered for membership since September 2014 are also India, Pakistan, Afghanistan, Iran and Mongolia, with Turkey also waiting in the wings – will also trade in their local currencies, detached from the dollar-based western casino scheme. A host of other nations increasingly weary of the decay of the western financial system which they are locked into are just waiting for a new monetary scheme to emerge. So far their governments may have been afraid of the emperor’s wrath – but gradually they are seeing the light. They are sensing the sham and weakness behind Obama’s boisterous noise. They don’t want to be sucked into the black hole, when the casino goes down the drain.
To punish Russia for Ukraine, Obama is about to sign into law major new sanctions against Russia, following Congress’s unanimous passing of a recent motion to this effect. – That is what the MSM would like you to believe. It is amazing that ten months after the Washington instigated Maidan slaughter and coup where a Washington selected Nazi Government was put in place, the MSM still lies high about the origins of this government and the massacres it is committing in the eastern Ukraine Donbass area.
Congress’s unanimity - what Congress and what unanimity? – Out of 425 lawmakers, only 3 were present for the vote. The others may have already taken off for their year-end recess, or simply were ‘ashamed’ or rather afraid to object to the bill. As a matter of fact, of the three who were present to vote, two at first objected. Only after a bit of arm-twisting and what not, they were willing to say yes. This is how the ‘unanimous’ vote came to be, as trumpeted by the MSM – unanimous by three votes! The public at large is duped again into believing what is not.
This very interesting commentary appeared on the vineyardsaker.blogspot.ca Internet site yesterday---and I thank reader 'David in California' for passing it around just after midnight MST.
Climbing onto the largest vessel the world has ever seen brings you into a realm where everything is on a bewilderingly vast scale and ambition knows no bounds.
Prelude is a staggering 488m long and the best way to grasp what this means is by comparison with something more familiar.
Four football pitches placed end-to-end would not quite match this vessel's length - and if you could lay the 301m of the Eiffel Tower alongside it, or the 443m of the Empire State Building, they wouldn't do so either.
In terms of sheer volume, Prelude is mind-boggling too: if you took six of the world's largest aircraft carriers, and measured the total amount of water they displaced, that would just about be the same as with this one gigantic vessel.
Under construction for the energy giant Shell, the dimensions of the platform are striking in their own right - but also as evidence of the sheer determination of the oil and gas industry to open up new sources of fuel.
Wow! I was impressed---and I'm not impressed easily. This amazing article appeared on the bbc.com Internet site on Tuesday sometime---and it's courtesy of South African reader B.V. I hope, for Shell's sake, that it doesn't turn into a white elephant even before it's finished.
About 70 “cash-for-gold” businesses in six cities across New Jersey have received a combined total of nearly 10,000 civil citations for allegedly violating consumer protection laws, officials announced today.
After undercover operations and unannounced inspections, authorities have cited 71 jewelry stores, pawn shops and other businesses in Newark, Paterson, Camden, Irvington, Trenton and Teaneck for various violations.
Each violation carries a fine ranging from $500 to $1,000.
“My message to the stores would be to follow the law,” said Steve Lee, acting director of the New Jersey Division of Consumer Affairs, said today during a press conference in Newark.
This gold-related story put in an appearance on the nj.com Internet site at 1:10 p.m. EST yesterday---and I thank Casey Research's own Jeff Clark for digging it up for us.
Spot gold rebounded from a two-week low amid signs of rising physical demand for the metal.
Swiss gold exports climbed to the highest this year, and flows from the U.K. suggest Swiss refineries are working at full capacity to meet demand from Asia, UBS Group AG said in a note today. Trading of the Shanghai Gold Exchange’s benchmark bullion spot contract advanced to the highest since April 2013.
“Physical demand was healthy,” David Govett, head of precious metals at Marex Spectron Group, said in an e-mailed note. “This will keep a floor under gold for the rest of the month.”
This Bloomberg article, co-filed from London and New York, showed up on their website at 12:26 p.m. MST on Thursday---and I thank Ken Hurt for sending it our way.
Switzerland exported 232.2 tonnes of gold in November, according to official Swiss Customs Administration statistics, an increase of 16 percent on the October total and the highest volume this year.
Of those exports, 34.7 tonnes of gold, including gold plated with platinum, in unwrought forms or for non-monetary purposes, was exported to China, down from 42.5 tonnes in the previous month.
Swiss statistics are a good indicator of the volume of metal being shipped into China, which does not publish official figures gold imports.
This very interesting article showed up on the bulliondesk.com Internet site at 11:49 a.m. GMT yesterday---and it definitely worth reading. I thank reader U.M. for sharing it with us.
Since ancient times the "gold rivers" of a rural corner of eastern Serbia have drawn prospectors hoping to strike it rich by teasing the precious metal from the area's waterways.
The mountainous, heavily forested region today is poor and depopulated, but a tiny community of panners still eke out a living by coaxing gold flakes -- and the occasional nugget -- from the brisk waters flowing to the Danube River.
"Gold, it's all around here and very good quality at 22 karats," said prospector Nebojsa Trailovic, 59, smiling broadly as he showed off some yellow flecks he had just panned from the Todorova Reka river.
"But it takes lots of work, seven or eight hours per day, your hands in cold water, to extract between 10 and 12 euros ($12 to $15) , about a half gram," said Trailovic.
This AFP story, filed from Debeli Lug in Serbia, showed up on the france24.com Internet site at 7:45 a.m. Europe time this morning---and my thanks go out to South African reader B.V. for sending it to me in the wee hours of this morning MST.
Gold importers are offering a discount of $2 an ounce versus London prices for the first time in almost five months due to market oversupply.
Importers generally charge a premium over London prices but demand in the world's second-biggest gold consumer is expected to fall sharply this month after shipments surged in the past three months.
"Supply is in excess but demand is very weak because there are no weddings and festivals until mid January. The overall sentiment is weak," said Prithviraj Kothari, executive director of India Bullion & Jewellers' Association.
The south Asian country imported 151.6 tonnes of gold in November, up nearly 38 percent from October, as traders bought aggressively expecting curbs on overseas purchases.
This Reuters news item, filed from Mumbai, appeared on their website at 6:11 p.m. IST yesterday evening---and it's the final offering of the day from Manitoba reader U.M.---for which I thank her.
The problem with most of those delighting in Russia’s apparent comeuppance for what the West views as its expansionary destabilising tactics in Crimea and Donbass is that they aren’t Russian. They assume Russians will act like Americans or western Europeans to a financial crisis and come rushing back, cap in hand, to beg forgiveness, return Crimea to its Ukrainian masters and withdraw any troops it may, or may not, have in Donbass. They should perhaps listen instead to Sergey Lavrov, the highly plausible and cultured Russian Foreign Minister who comments that Russia has survived such adversities in the past, and come out stronger as a result.
Yes, Lavrov is talking to his, and his masters’, own political book but he also has a point. Look at President Putin’s domestic popularity ratings. They are riding at levels any western politician would give his or her eye teeth for. Russians are a proud people who feel they were taken to the cleaners by the West pre-Putin during the break-up of the Soviet Union and now have a strong leader in charge who is putting Russia back on the map as a world power.
Russia is not a rich nation by any standards. True there are some exorbitantly rich individuals and a growing middle class but the bulk of the population remains very poor by Western standards and feels it has nothing to lose anyway. Those featuring in the Western media as suffering horrendously because their low interest dollar loans may now drive them into bankruptcy as the ruble dives against the dollar are but a minute fraction of the population. The huge majority of Russians don’t have mortgages or dollar loans and while resultant inflation may eat into what little they do have, as Lavrov points out, they’ve been there before and come out stronger.
This very well written article by Lawrie was something he sent me just before I filed yesterday's column in the wee hours of Thursday morning, but I was so jammed for time that I told him it had to wait for today---and here it is. It's definitely worth your while.
Citigroup is the Wall Street mega-bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn't qualify for a bailout; has now written its own legislation to deregulate itself; got the president of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week.
And there is one more thing you should know at the outset about Citigroup: It didn't just have a hand in bringing the country to its knees in 2008; it was a key participant in the 1929 collapse under the moniker National City Bank. Both the U.S. Senate's investigation of the collapse of the financial system in 1929 and the Financial Crisis Inquiry Commission that investigated the 2008 collapse cited this bank as a key culprit.
The FCIC wrote: “…we do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not…Too often, they lacked the political will – in a political and ideological environment that constrained it – as well as the fortitude to critically challenge the institutions and the entire system they were entrusted to oversee.”
This longish, but very interesting commentary appeared on the wallstreetonparade.com Internet site on Tuesday---and I found it in a GATA release yesterday.
On today’s “The Roundup,” James Rickards, author of “Currency Wars,” Bloomberg's Trish Regan, Lisa Abramowicz and Douglas Lavanture break down some of the day’s top market stories on “Street Smart.” The most interesting part is in the first 5:20 minutes---and you can skip the rest if you wish to. I thank Harold Jacobsen for sending this.
Lifting WTI over $59 and Brent over $63. In fact, the $9 surge from the lows is the biggest move in crude since April 2009!
As Bloomberg reports, Russia Government Supported Ruble Ahead of Putin Conference.
"They want to reduce volatility and strengthen the ruble, and they are preparing the ground for Putin’s speech tomorrow,” Per Hammarlund, the chief emerging- markets strategist at Skandinaviska Enskilda Banken AB, says by e-mail today.
“It’s the ruble’s ‘P-Day.’”
President Vladimir Putin will hold an annual media conference tomorrow.
The media conference begins at noon Moscow time on Thursday, which is 4 a.m. EST this morning in New York, so it will be over by the time that North America wakes up today. This Zero Hedge story, with some excellent charts, appeared on their website at 12:02 p.m. EST on Wednesday---and I thank Dan Lazicki for sharing it with us.
The combined effect produced by Western sanctions and low oil prices proves that there’s no place for Russia in the international financial system, believes British prime minister David Cameron, urging for more pressure on Moscow.
“We should stand up very firmly against the Russian aggression that’s taking place,” Cameron said before the Parliament on Wednesday.
The PM reminded that it’s the U.K., which “led the way in Europe in making sure there were sanctions” imposed against Russia over its 'annexation' of Crimea in March and Moscow’s alleged involvement in the Ukrainian crisis.
“And what the combination of the lower oil price and the sanctions are showing that I think it isn’t possible for Russia to be part of the international financial system, but try and opt out of the rules-based international legal system,” Cameron said.
Can you believe this guy? How does a leader of a country get away with saying crap like this? This article was posted on the Russia Today website at ten minutes to midnight on Wednesday evening Moscow time, which was 3:50 p.m. in New York. I thank Roy Stephens for his first contribution to today's column.
Some 400 Russian sailors training on a Mistral-class warship France controversially built for their navy will be returning home for an unspecified amount of time, the ship’s French builder has said.
"I can confirm that the Russian sailors will return (to Russia) before the end of year," a spokesman for shipbuilder DCNS told AFP news agency on Wednesday.
The spokesman did not give a date for the sailors' departure and could not say whether they would return to the port city of Saint-Nazaire, where the ship was built.
The sailors have been training since June on board the “Vladivostok”, one of two Mistral-class helicopter carriers destined for the Russian navy according to the terms of a €1.2 billion ($1.58 billion) deal signed in 2011.
This news item showed up on the france24.com Internet site yesterday sometime---and I thank South African reader B.V. for sending it our way.
Russian authorities eased accounting rules to curb banks’ need for dollars, seeking to ease concern the ruble’s plunge will lead to a full-blown financial crisis.
The ruble and stocks rallied after the Bank of Russia announced the measures. They came a day after the central bank’s 1 a.m. interest-rate increase and a free-fall of as much as 19 percent in the currency, prompting speculation of a potential meltdown in emerging markets.
The package of measures allows banks to use the third-quarter exchange rate in valuing risk-weighted assets and imposes a moratorium on mark-to-market accounting. Russian companies face about $20.3 billion in non-ruble loan and debt repayments before the end of March, according to data compiled by Bloomberg. The ruble has dived 35 percent this quarter.
“The most important measure is this use of third-quarter valuation for risk-weighted assets,” Natalia Berezina, banking analyst at UralSib Capital, said by phone. “This is a big boost as some banks would fail to meet central bank regulatory capital ratios at their current levels.”
This Bloomberg article, filed from Moscow, put in an appearance on their website at 10:02 a.m. Denver time yesterday morning---and I thank reader Howard Wiener for finding it for us.
James Rickards, author of "Currency Wars," UBS Wealth Management's Jorge Mariscal and Bloomberg economist Carl Riccadonna discuss Russia's efforts to stem the ruble crisis. They speak with Bloomberg's Trish Regan on "Street Smart."
This 6:47 minute Bloomberg video clip from Tuesday falls into the absolute must watch category---and it's another offering from Harold Jacobsen.
The United States declared economic war on Russia. It is hard to pinpoint the why of the matter but in this author’s opinion it always comes back to U.S. dollar dominance. Russia has made no secret of its disdain for the global pricing mechanism of oil. The chart below shows what matters in the pricing of oil and it has zero to do with shale miracles or over supply.
It is the dollar and only the dollar that matters in the pricing of oil with an exception being an act of nature. The West has attacked the currency of a sovereign nation for UNECONOMIC reasons.
Russian debt to GDP is roughly 14%. Their debt to GDP is pristine. Japan’s is 227%, Greece 175%, Italy 132%, and the U.S. 105%. Now can someone kindly explain why a currency would implode like the Ruble when their financial condition relative to the West and Japan looks like a Ferrari among a bunch of Ford Pintos?
This guest post appeared under Koos Jansen's name over at the bullionstar.com Internet site yesterday---and I'm breaking my own rule of posting an unaccredited source, because the author, whoever he is, has it exactly right. It's certainly worth reading.
Russia's suddenly escalating financial crisis risks spilling beyond its borders and endangering parts of the global economy.
With economies in Europe, Japan, China and Latin America already ailing, fresh threats have emerged from Russia's shriveled currency, its move to dramatically boost interest rates, the damage from plummeting oil prices and Western sanctions over Russia's action in Ukraine.
"Our deepest fear has been - and still is - that putting Mr. Putin in a `nothing-to-lose' situation removes any constraint he might have had against reneging on his foreign debt obligations, which Russian borrowers probably cannot pay off or service now," writes Carl Weinberg, chief economist at High Frequency Economics. Foreign lenders would have to brace for $670 billion in losses.
This possibility has sparked an investor retreat from Russia. But that pullback has also caused investors to flee other emerging market currencies that are deemed risky. They include Turkey, Brazil, South Africa and Indonesia, noted John Higgins, chief markets economist at Capital Economics.
Doug Noland will have a field day with all this in his Friday evening Credit Bubble Bulletin. This AP story, filed from Washington, showed up on their Internet site at 5:27 p.m. EST on Tuesday afternoon---and I found it in yesterday's edition of the King Report.
The Camembert made near Moscow might look -- or even smell -- like the famous French fromage, but it's part of a booming knock-off market in Russia as stocks of banned European cheeses disappear.
Mozzarella made in the Russian region of Bryansk and Roquefort from Altai in Siberia are also part of the flourishing trade that has popped up since Russia decreed a food embargo in response to Western sanctions in the summer.
The names Roquefort and Mozzarella cannot be used in the European Union, and increasingly abroad, unless the products are made in a particular place or in a certain way.
However, since Soviet times, Russians have been swilling local Champagne and Cognac -- although both names are protected under E.U. rules -- without too much concern.
This interesting article showed up on the france24.com Internet site at 5:06 p.m. Europe time on their Wednesday afternoon---and it's another contribution from reader B.V.
The government garnered 160 votes in the first round of crucial presidential elections on Wednesday, performing slightly worse than anticipated and increasing speculation about snap polls.
In addition to the 155 coalition MPs, five independents backed the government’s candidate, former European commissioner Stavros Dimas. Another 135 voted “present” while five were absent. The result was far short of the 200 votes required in the first round, a target that the government is also certain to miss in next week’s second round. However, ahead of the critical third vote on December 29 when the threshold drops to 180, the government had hoped to gain between 161 and 165 in the first round in a bid to build momentum for the votes to come.
There were some surprises, including the decision by independent Panayiotis Melas to vote “present” rather than backing Dimas (Melas later suggested he might change his stance in the coming votes). Also two former MPs of neofascist Golden Dawn, Chrysovalantis Alexopoulos and Stathis Boukouras, who was released from prison earlier on Wednesday, did not turn up for the vote.
Meanwhile seven Golden Dawn lawmakers were granted day release from Korydallos Prison to attend the vote. They were subdued for the most part despite fears of upheaval.
You couldn't make this stuff up. This news item appeared on the ekathimerini.com Internet site at 8:53 p.m. Europe time last night---and my thanks go out to Harry Grant for bringing it to our attention.
Earlier this evening China's State Administration of Foreign Exchange's (SAFE) Wang Yungui noted "the impact of the Russian Ruble depreciation was unclear yet, and, as Bloomberg reported, "SAFE is closely watching Ruble's depreciation and encouraging companies to hedge ruble risks."
His comments also echoed the ongoing FX reform agenda aimed at increasing Yuan flexibility which The South China Morning Post then hinted in a story entitled "Russia may seek China help to deal with crisis," which which noted that Russia could fall back on its 150 billion yuan ($24 billion) currency swap agreement with China if the ruble continues to plunge, that was signed in October. Furthermore, two bankers close to the PBOC reportedly said the swap-line was meant to reduce the role of the U.S. dollar if China and Russia need to help each other overcome a liquidity squeeze.
This Zero Hedge article showed up on their website at 11:17 p.m. EST late last night---and I thank Casey Research's own Bud Conrad for passing it around.
For the first time, China has a real shot at getting the International Monetary Fund to endorse the yuan as a global reserve currency alongside the dollar and euro.
In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. Including the yuan in this so-called Special Drawing Rights system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance.
China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries. The Asian nation is likely to pass both tests, said Eswar Prasad, who until 2006 worked at the IMF, including spells as heads of its financial studies and China divisions.
This very interesting Bloomberg article showed up on their website a week ago---and it's worth reading.
When Russian miners pulled a strange red and green stone out of the ground, they immediately knew it was different to the thousands of tons of ore they process every day.
In fact, what workers at Alrosa's Udachnaya diamond mine had unearthed was a 30mm rock that contained 30,000 diamonds - a concentration 1m times higher than normal.
However, despite the rare find the company donated the rock to the Russian Academy of Sciences, as the diamonds are so small that they cannot be used as gems.
After scanning the rock with X-rays, scientists found that the diamonds inside measure just 1mm and are octahedral in shape - similar to two pyramids stuck together at the base. The red and green colouring comes from larger crystals of garnet, olivine and pyroxene.
This interesting news item appeared on the telegraph.co.uk Internet site at 5:20 p.m. GMT yesterday afternoon---and it's the final offering of the day from South African reader B.V.
This 49:17 minute audio interview appeared on the physicalgoldfund.com Internet site on Tuesday sometime---and it's the final contribution of the day from Harold Jacobsen. There's no transcript---and I must admit that I haven't had time to listen to it all, but what I have heard makes it worth your while, although some of what he says, you've certainly heard before.
At the recent Mines & Money conference and exhibition In London there was a perhaps surprisingly upbeat feel given the poor performance of metals prices over the preceding two to three years.
While this optimistic mood seemed to apply to precious and base metals producers alike, as is the norm nowadays it was the gold companies which were looking for the biggest upside. Perhaps this was because those that can nowadays afford to participate in an event like this – it is expensive to exhibit and to attend – are those who are going to survive in the current price environment come what may. But perhaps even more prevalent was the perceived view that things were at last truly bumping along the bottom and that the only way forward was up.
There are a lot of factors supporting this latter viewpoint, but it’s probably just as well for the bulls out there not to get too carried away as many of these bullish factors have been around before and still prices have continued to be driven down. But this time perhaps the optimists do have a point.
On gold and silver demand, this appears to be riding high. Chinese Q4 demand as represented by Shanghai Gold Exchange withdrawals has been just as strong as it was in the 2013 record year. True demand had slipped pretty badly in Q2 and Q3 compared with a year earlier, but it has staged a huge pick up since the end of September. But perhaps even more significant has been India’s return to the gold buying spree with November gold imports officially put at 150 tonnes, although some assessments had even suggested it might have been as high as 200 tonnes.
This commentary by Lawrie, which was posted on the mineweb.com Internet site on Wednesday, is certainly worth reading--and I thank him for sliding it into my in-box early yesterday morning.
Don’t believe everything you read in the mainstream media. Especially don’t believe anything in the financial news media until you’ve looked at the data yourself. It’s no wonder investors are so often caught flatfooted in the markets. Financial “journalists” feed their readers and viewers a constant stream of misinformation and bad data. Financial reporters are so atrocious at serving their audience I have to believe that they are, wittingly or unwittingly, part of a deliberate and elaborate campaign of disinformation… unless you believe in Coincidence Theory.
Housing starts collapsed in November. They weren’t good, they weren’t even so-so as media reports intimated. The seasonally adjusted annualized number which the paid flacks report is absolute nonsense. It’s fiction.
Actual, not seasonally adjusted single family starts were down by 10,400 units in November to 47,700 units. November is always a down month but this was the worst November performance since 2008, in the teeth of the housing crash. On a year to year basis starts were down by 6.3%. It’s absurd that you can’t find that fact anywhere near the mainstream media headlines. In fact, Bloomberg outright lied about it.
This commentary by Lee Adler appeared on David Stockman's website yesterday sometime---and today's first story is courtesy of Roy Stephens.
This 5:51 minute video clip with Mike Maloney put in an appearance on the youtube.com Internet site yesterday sometime. I thank Dan Rubock for sending it my way.
The relentless fall in oil prices and Russia's plunging currency pose big challenges as the US Federal Reserve opens a two-day meeting Tuesday.
The Fed's last meeting of 2014 was expected to confirm its path toward monetary policy normalization after holding its base interest rate at the zero level for six years to bring the country out of the Great Recession.
But stagnating economies in Europe and Japan and slowing growth in China, coupled with the threats to markets and the financial system from the oil price and Russian crises, could force the US central bank to weigh a pause.
While the world's most powerful central bank is unlikely to make any immediate changes to its interest rate and liquidity stance, it could signal via comments and economic forecasts a readiness to stick to that stance for longer than expected to help the global economy through a rough period.
This AFP article, filed from Washington, appeared on the france24.com Internet site at 5:16 p.m. EST on Tuesday---and it's the first offering of the day from South African reader B.V.
The bill - which primarily sanctions Russia's defence industries - passed with overwhelming support in Congress.
Spokesman Josh Earnest said the bill sent "a confusing message to our allies" but Mr Obama will sign it because it "preserves flexibility".
Russia's rouble has lost half its value this year amid lower oil prices and Western sanctions.
The currency went into free-fall in trading on Tuesday.
The bill would also give Mr Obama the authority to provide lethal and non-lethal military assistance to Ukraine, but not require him to do so.
This short article appeared on the bbc.com Internet site at 4:39 p.m. EST yesterday afternoon---and it's the second offering of the day from Roy Stephens.
Just like with the Mohammed Islam story, the religious belief by the cheerleading crew that the crashing price of oil is so "unambiguously, unquestionably, indisputably" good for the U.S. is so taken for granted, that nobody actually checked the facts. So here is one such attempt by the Financial Times, which writes that "almost $1 trillion of spending on future oil projects is at risk as a result of the plunge in crude to $60."
The price plunge has shaken the energy industry, throwing some of the majors’ most ambitious plans into doubt and pummeling oil company shares. Projects in challenging frontier regions like the deep waters of the Gulf of Mexico are predicated on high oil prices and may not be economic with oil at $60 a barrel — the level Brent was trading at on Monday afternoon.
Goldman has examined 400 oil and gas fields around the world, many of which are still awaiting a final investment decision. Its analysis, based on a $70 oil price, shows that fields representing 2.3m b/d of output by 2020 and awaiting a green light have now become uneconomic. That figure rises to 7.5m b/d of production by 2025. The analysis excludes U.S. shale.
The bank shows that companies will need to cut costs by up to 30 per cent — for example by forcing suppliers to take steep price cuts — to make these projects profitable at $70 a barrel.
This Zero Hedge article appeared on their Internet site at 10:58 a.m. EST on Tuesday---and it's the first contribution of the day from Manitoba reader U.M.
The current global currency war started in 2010. My book, Currency Wars, came out a little bit after that. One of the points that I made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for five, 10 or 15 years, sometimes longer.
And so it’s really not a surprise that here we are in 2014 talking about currency wars because it’s the same on that’s been going on. A lot of what you read or see on the TV is after some policy move by, let’s say, Japan to weaken the yen. And reporters will say: “Hey, there’s a currency war going on,” or “There’s a new currency war.”
I roll my eyes a little bit and go: “No, this is the same one, the same currency war; it’s just a new phase or new battle.”
So yes, it is going on. And it does have a lot of explanatory power. It’s one of the most important things going on in economics today. I think a year from now, I’ll be writing to you and we’ll still be talking about it.
This commentary by Jim appeared on the dailyreckoning.com Internet site on Monday sometime---and it's courtesy of Harold Jacobsen.
The government fixing of prices in grocery stores has caused unnaturally low prices on many staple goods. A predictable result has been that Venezuelans have been cleaning out the shelves at supermarkets and taking the goods to neighbouring Colombia for resale. (Colombia maintains free-market pricing, and as such, a profit can be made by Venezuelans.)
Typically, such staples as meat, grains, and toilet paper are bought immediately upon delivery to the supermarkets in Venezuela. Shortages are so significant that people frequently queue at supermarkets in shifts, as the waits are so long to receive goods.
This movie is, of course, ongoing. Historically, however, food shortages tend to occur in the latter stages of a decline, just prior to collapse of the system. (No fear is more gripping in the minds of a population than the fear of starvation, and already, in the last year, food prices have nearly doubled in Venezuela.)
This commentary by Jeff Thomas appeared on the internationalman.com Internet site on Monday---and I thank their senior editor Nick Giambruno for sending it along yesterday.
The German private sector, considered the backbone of the country's economy, expanded at the slowest pace in 18 months in December, increasing the risk that growth will slow further at the beginning of 2015, said a report released by the Markit Economics research group Tuesday.
"Today's flash PMI [Purchasing Managers' Index for manufacturing and services] results showed that private sector output growth in Germany slowed further in December. The pace of expansion was in fact the weakest in one-and-a-half years and well below levels seen earlier in the year, when GDP grew 0.8%," the author of the study Oliver Kolodseike said in comments to the report.
Kolodseike suggested that the reduction of oil prices and energy costs gave German private companies a chance to lower prices, but do not help the firms attract new customers.
Overall German company performance has also been affected by the recent train operator and airline pilot strikes in Germany in late October and November of this year.
This short business news item showed up on the sputniknews.com Internet site at 6:58 p.m. Moscow time on their Tuesday afternoon, which was 8:58 a.m. in New York. I thank South African reader B.V. for sharing it with us.
U.S. energy company Chevron said it was still looking for opportunities in Ukraine, but opted to shelve a contract to tap the country's shale gas potential.
In October, members of a regional council in Ukraine approved a draft production agreement for shale natural gas with Chevron. The deal was formalized in November.
Ukraine is one of the Eastern European countries thought to be rich in shale natural gas and the government estimates there may be enough natural gas in shale plays to meet the country's needs without imports.
Peter Clark, country manager for Chevron, told the Kiev Post the company terminated the production agreement because of legislative hurdles in Ukraine.
This very interesting UPI story showed up on their website at 8:01 a.m. EST yesterday---and I thank Roy Stephens for sharing it with us.
Royal Dutch Shell has blamed air strikes by the government in Kiev against its own citizens in southern Ukraine as the reason it decided to declare a halt to its shale oil projects in the troubled region.
In reality, the truth may be closer to the fact that company is disappointed with the economic viability of what it once thought was a large shale deposit and is looking for a way out.
After a series of dramatic statements and the signing of a $410-million letter of intent, a veil of uncertainty is being drawn around the myth of Ukrainian shale.
According to a recent statement by the former head of Royal Dutch Shell, Peter Voser, “the company is now analyzing its business in shale,” which, translated from the streamlined language of press releases, means: The project is not earning its keep and we need to do something (Read: write off expenses).
This very interesting article [datelined 19 June 2014] put in an appearance on the oilprice.com Internet site---and it's definitely worth reading in light of the UPI/Chevron article posted above it. I thank Brad Robertson for digging this up on our behalf.
Russian President Vladimir Putin has held a telephone conversation with German Chancellor Angela Merkel, French President Francois Hollande and Ukrainian President Petro Poroshenko, discussing the situation in Donbas (Ukraine's southeastern regions), the Kremlin's press service announced Wednesday.
The Kremlin's statement stressed "the importance of a swift meeting of the Contact Group with the aim of implementing the Minsk agreements and facilitating dialogue between Kiev and [Ukraine's] southeast".
"The issues of the economic recovery of the affected regions [Donbas] and the provision of humanitarian and social support to the [local] population have [also] been discussed," the statement added.
This news item, filed from Moscow, showed up on the sputniknews.com website at 2:02 a.m. Moscow time on their Wednesday morning---and it's another contribution from Roy Stephens.
“Russia will not only survive but will come out much stronger,” he said, brushing aside concerns about the country's crisis-hit economy. “We have been in much worse situations in our history and every time we have got out of our fix much stronger.”
Lavrov pulled no punches over his contempt for Western-imposed sanctions, levied against Russia for its alleged meddling in a pro-Moscow insurgency in eastern Ukraine following the ouster of the pro-Kremlin president in February.
He saved his most scathing comments for the E.U.: “Of course sanctions hurt, but I don’t believe the sanctions will help the European Union. The United States ordered the E.U. to impose sanctions and frankly we have overestimated the independence of the European Union [from the U.S.].”
“Sanctions are a sign of irritation, they are not the instrument of serious policies,” he added.
This must watch video interview, especially for any serious student of the New Great Game, showed up on the france24.com Internet site yesterday afternoon. It runs for a surprising 25:15 minutes. There is a transcript, but it's tiny. It's another offering from reader B.V.
Earlier, we reported that various currency brokers such as FXCM and FxPro, would - as a result of the soaring liquidity in the USD/RUB pair - suspend trading in the Russian Ruble (while other merely hiked margins to ridiculous levels). It appears things have escalated again, and as FXCM just reported, instead of just politely advising clients not to open new USD/RUB position tomorrow, it has advised anyone long, or short, the USD/RUB that their positions will be forcibly shut in moments.
So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!
And this is what happened following the post: as soon as all those short the RUB (long USD/RUB) realized they have to take profits, the USD/RUB tumbled some 500 pips (!) in the process sending stocks surging.
This must read news item, along with some excellent charts, appeared on the Zero Hedge website at 2:20 p.m. EST yesterday---and I thank 'David in California' for sending it our way.
Last week I flew into Moscow, arriving at 4:30 p.m. on Dec. 8. It gets dark in Moscow around that time, and the sun doesn't rise until about 10 a.m. at this time of the year — the so-called Black Days versus White Nights. For anyone used to life closer to the equator, this is unsettling. It is the first sign that you are not only in a foreign country, which I am used to, but also in a foreign environment. Yet as we drove toward downtown Moscow, well over an hour away, the traffic, the road work, were all commonplace. Moscow has three airports, and we flew into the farthest one from downtown, Domodedovo — the primary international airport. There is endless renovation going on in Moscow, and while it holds up traffic, it indicates that prosperity continues, at least in the capital.
Our host met us and we quickly went to work getting a sense of each other and talking about the events of the day. He had spent a great deal of time in the United States and was far more familiar with the nuances of American life than I was with Russian. In that he was the perfect host, translating his country to me, always with the spin of a Russian patriot, which he surely was. We talked as we drove into Moscow, managing to dive deep into the subject.
From him, and from conversations with Russian experts on most of the regions of the world — students at the Institute of International Relations — and with a handful of what I took to be ordinary citizens (not employed by government agencies engaged in managing Russia's foreign and economic affairs), I gained a sense of Russia's concerns. The concerns are what you might expect. The emphasis and order of those concerns were not.
This commentary by Stratfor Chairman George Friedman appeared on their Internet site at 9:02 a.m. GMT yesterday---and it's definitely worth reading, especially for all serious students of the New Great Game. It will take you 15 minutes to run through this, but it's more than worth it if you have the interest. The first reader through the door with this yesterday was Roy Stephens.
Oil in New York traded near a five-year low as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy to refrain from curbing supply to tackle a global surplus.
Futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is said to be offering shipments to Asia at the deepest discount in at least 14 years, taking a cue from Saudi Arabia in cutting price differentials.
Oil has slumped 44 percent this year as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing world demand growth. Leading members of the Organization of Petroleum Exporting Countries such as Saudi Arabia have resisted calls from smaller producers including Venezuela and Ecuador to reduce quotas to stem the price rout.
“OPEC won’t make a move unless the U.S. cuts its production first, and for now it looks like the game of chicken will most likely continue through next year,” Kang Yoo Jin, a commodities analyst at Woori Investment & Securities Co. in Seoul, said by phone. “As oil prices are slumping, it seems to be a strategic decision for producing countries including OPEC and Russia to keep their output levels unchanged.”
This Bloomberg story, filed from Seoul, South Korea on Wednesday morning, appeared on their website at 10:45 p.m. MST on Tuesday evening. Marin Katusa passed it around the Casey Research crowd late last night.
The international financial system is based on the U.S. dollar. The greenback is both the world’s “reserve currency” — the one everyone wants to hold when things go bad — and the principal means of exchange. The vast majority of transactions between companies, countries and people are denominated in dollars.
As my investment-oriented colleagues regularly discuss on this page, the dollar’s dominance isn’t unchallenged. The Chinese yuan, in particular, has pretensions to become a second global currency, one so widely used that transactions unrelated to China could be conducted in yuan.
But there’s another challenge on the horizon … a new international interbank system that could create important opportunities — or chaos — for the world economy, depending on how the proverbial ball bounces.
This very interesting commentary showed up on the russia-insider.com Internet site yesterday---via The Sovereign Investor. It's also courtesy of Roy Stephens.
Turkish leader Recep Tayyip Erdogan has told the EU to “mind its own business” on free press, marking an ever-deeper rift in relations.
He made the comments at a speech in the Tupras oil refinery outside Istanbul on Monday (15 December) after European officials criticised his latest arrests of opposition-linked journalists.
“They cry press freedom, but they [the arrests] have nothing to do with this … We have no concern about what the EU might say, whether the EU accepts us as members or not, we have no such concern. Please keep your wisdom to yourself”, he said.
“The EU should not intervene in acts taken by the police and judiciary against entities that jeopardise our national security. It should mind its own business”.
This news item, filed from Brussels, appeared on the euobserver.com Internet site at 8:43 a.m. on their Tuesday morning---and it's the final offering of the day from Roy Stephens, and I thank him on your behalf.
China’s holdings of U.S. Treasuries fell to a 20-month low in October, as yuan appreciation indicated less of an impetus to buy the government securities.
China held $1.25 trillion in U.S. debt as of October, a $13.6 billion drop from September, the Treasury Department said in a monthly report today. The nation remains the largest foreign holder, ahead of Japan, whose stockpile increased $0.6 billion to $1.22 trillion, reducing the gap between the two countries to the narrowest since September 2012.
The yuan rose 0.4 percent against the dollar in October as the government moves toward a market-determined exchange rate, part of efforts to expand the currency’s use worldwide. The less China intervenes to weaken its currency, the less it needs to buy securities such as Treasuries.
“The lack of growth in their Treasury portfolio has been happening throughout this year, so I tend to think it’s more of a structural trend that’s developing,” said Stanley Sun, an interest-rates strategy analyst at Nomura Securities International Inc. in New York. He said he expects “a grind lower rather than any sharp decline” in holdings.
This Bloomberg article, filed from Washington, was posted on their website at 3:53 p.m. Denver time on Monday afternoon---and I thank reader M.A. for bringing it to our attention.
Russia’s surprise interest-rate increase failed to stop the plummeting ruble. The next weapon available to repair economic havoc caused by sanctions and falling oil prices: selling gold.
Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers.
Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves.
I'll be amazed if Russia taps its gold reserves---and I expect an update with their November Central Bank gold purchases on Friday. This Bloomberg story showed up on their website sometime yesterday afternoon Denver time, but was updated just before midnight. It also carries another propaganda line about Russia's annexation of the Crimea. I found it in a GATA release yesterday.
Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the U.S. revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the U.S. sanctions list and a Treasury official said that "Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company."
Since then the Geneva-based company rarely appeared in the media which is how the nondescript company liked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals, read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals.
But the biggest surprise in this story was the reason why Gunvor chose to discontinues its gold trading. Per Bloomberg, "executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said."
I'm not sure what to make of this Zero Hedge/Bloomberg piece that appeared on their Internet site at 10:35 p.m. EST last night. It's worth reading---and I thank reader 'David in California' for sending it along.
Mining companies are set to increase their outstanding net forward gold sales by between 42 and 52 tonnes in 2014, the largest expansion of the global gold hedge book of any year since 1999, an industry report said on Tuesday.
In their quarterly Global Hedge Book Analysis, Société Générale and GFMS analysts at Thomson Reuters said although the global hedge book shrank by 6 tonnes in the third quarter and will contract further in the fourth, they still expect net hedging in the full year.
Increased hedging would theoretically be negative for gold prices, as forward sales add to supply as gold is leased and sold forward. But despite the recent price drop, mining companies are wary of a wholesale return to hedging, after they lost billions of dollars unwinding hedged positions in the mid 2000s.
No gold mining company will sell their production forward at these prices---and even if they did, these small amounts are not even close to being material. This Reuters story, filed from London yesterday, is much ado about nothing. I thank reader U.M. for bringing it to my attention---and now to yours.
India's gold imports were over a staggering 150 tonnes in November and have seen a "phenomenal" rise in India according to India’s Trade Secretary, Rajeev Kher.
A few weeks ago we said that the death of the Indian gold market was greatly exaggerated. The latest gold import data out of India confirms this.
The import restrictions on gold that were imposed on Indians in August of 2013 were lifted at the end of last month. Despite the fact that the restrictions were still in place gold importation in November surged an incredible 571% relative to the same month last year at over 151.58 tonnes.
This was an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.
261 tonnes of gold imports in two months for India is a huge amount---and along with what China's taking off the market, one has to wonder where all this gold is coming from. This commentary on Indian gold imports by Mark O'Byrne appeared on the goldcore.com Internet site yesterday---and is worth your while.
India will weigh the impact of last month's easing of gold import rules after inbound shipments jumped 38 percent in November to push its trade deficit to an 18-month high, Trade Secretary Rajeev Kher said on Tuesday.
In a surprise move, the world's second-biggest gold consumer scrapped a rule for traders to export 20 percent of all gold imports, belying expectations for tighter curbs instead.
After the change, gold imports surged to 151.58 tonnes in November, an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.
This gold-related Reuters story, filed from Mumbai, was posted on their Internet site at 10:25 p.m IST on their Tuesday evening---and contains a lot of the same information that was in Mark's column posted above, but there is other information, so it's worth your while if you have the time. I thank Manitoba reader U.M. for her final contribution in today's column.
U.S. gold mine production declined 7% in the first nine months of this year, the U.S. Geological Survey has reported.
The decline was partly attributed to lower production from Barrick Gold Corp. and Newmont Mining.
Barrick’s Cortez Mine in northern Nevada produced 21,600 kg (684,451 troy ounces) in the first nine months of this year for a 36% decline in output, which was attributed to a lower ore grade.
Production for Newmont’s Nevada operations during the same period also dropped 10% to 34,600 kg (1,112,407 oz) because of the sale of the Midas Mine and a development phase that will increase waste stripping and decrease mill throughput at several mines, said the USGS.
The production decreases were partially offset by Rio Tinto’s Bingham Canyon Mine with 7,060 kg (226,982 oz) in the first nine months of the year, a 70% increase over the same period of last year when the operation was still recovering from a massive landslide.
There are a lot of facts and figures in this news item that appeared on the mineweb.com Internet site yesterday---and it's definitely worth your while if you're into numbers.